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The UAE’s economic growth is anticipated to stand at 3.7% for 2024, weighed down by oil production cuts, according to the end-of-year ICAEW Economic Insight report prepared by Oxford Economics. ICAEW expects growth to accelerate to 4.5% next year, supported by an expected ramp-up of oil output levels over the upcoming three years.
The non-oil economy is predicted to grow by 4.5% in 2024, slightly easing to 4.3% in 2025 due to pricing pressures and capacity constraints in finance and construction. The main drivers of growth are tourism and travel, real estate, and IPO-driven capital markets.
How does the forecast compare with others? The World Bank maintained its GDP growth outlook for the UAE at 3.3% in 2024, while its forecast for 2025 and 2026 remained unchanged at 4.1%, supported by an expected recovery in oil production. Moody’s, on the other hand, expects growth to come in at 3.8% this year and 4.8% next year.
The UAE is projected to achieve a budget surplus of 4.1% of GDP in 2025, with expectations that the easing of interest rates will continue, supporting real estate and private-sector investment.
Regional performance is showing mixed signals: The ICAEW revised downwards its forecast for GCC growth to 1.9% in 2024 — a reduction of two percentage points — due to Opec+’s oil output limits. It anticipates a rebound to 4% in 2025 as production levels increase. The region’s non-energy sectors are expected to grow by 4% in 2023-24 due to high interest from investors, with the UAE taking the top spot in terms of foreign direct investment flows in proportion to the size of the economy. Inflation projections for the region increased to 1.8% in 2024, with expectations for this figure to reach 2.3% in 2025.
